{"id":256801,"date":"2026-09-21T10:02:06","date_gmt":"2026-09-21T14:02:06","guid":{"rendered":"https:\/\/ibkrcampus.com\/campus\/?p=256801"},"modified":"2026-09-21T10:42:40","modified_gmt":"2026-09-21T14:42:40","slug":"economic-update-week-of-september-21-2026","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/economic-update-week-of-september-21-2026\/","title":{"rendered":"Economic Update: Week of September 21, 2026"},"content":{"rendered":"\n

Growth<\/h2>\n\n\n\n

The U.S. economy grew 1.5% SAAR in 2Q26 as a widening trade deficit and weaker government spending were offset by accelerating consumer spending and continued strength in business fixed investment. Consumer spending rose 3.4% while business fixed investment rose 8.5% as spending on equipment rose again due to the AI buildout. Net exports removed 1.1% from growth as imports jumped 12.5%. Government spending fell 1.0% due to weaker nondefense spending. Real final sales to private domestic purchasers rose 4.2% after a 1.7% gain in 1Q26, suggesting that underlying economic momentum held strong with temporary fiscal support from tax refunds, but could fade later in the year.<\/p>\n\n\n\n

Jobs<\/h2>\n\n\n\n

The August Jobs Report came in hotter than expected. Nonfarm payrolls rose 162k in August, well above consensus estimates of 55k.The unemployment rate was unchanged at 4.1%, with labor supply still looking tight even as labor force participation edged higher. Private payrolls rose 127k, led by construction and health care. Elsewhere, there were solid job gains in leisure and hospitality and government, with local government education rising ahead of the school year. Meanwhile, 23k jobs were lost in the information sector. Put together, this is a labor market that is tight, not strong. Corporate America isn’t adding headcount with urgency, but it isn’t cutting either, with layoffs and claims still near the low end of their historical range. We expect the unemployment rate to continue drifting toward 4% by year-end, driven primarily by weak labor supply growth.<\/p>\n\n\n\n

Profits<\/h2>\n\n\n\n

The second quarter earnings season has been strong, driven by AI and energy. Consensus is calling for S&P 500 EPS to grow by about 48% y\/y. If realized, it would mark a second consecutive quarter of 20%+ earnings growth. Importantly, the numbers are being skewed by large paper gains from the hyperscalers’ investments in private AI companies. Excluding those, earnings growth would still be strong at 36.5%. Growth remains concentrated, but has followed capex dollars out of the hyperscalers and into the semiconductor industry, which is driving over half the index level growth.<\/p>\n\n\n\n

Inflation<\/h2>\n\n\n\n

August CPI held the y\/y rate at 3.4% from the month prior, driven primarily by a reacceleration in energy prices. Core CPI came in hotter than expected, rising 0.3% m\/m compared to consensus estimates of 0.2%, and 2.4% y\/y. Core inflation was led by communication, as boosts to telecom plan prices pushed the category up 5.4% in August and added nearly 0.1% to core inflation. Elsewhere, food prices were contained and auto insurance continued to cool. With core CPI coming in higher than expected, this may be enough to justify the Fed hiking rates at the September meeting.<\/p>\n\n\n\n

NEW THIS WEEK<\/p>\n\n\n\n

Rates<\/h2>\n\n\n\n

At its September meeting, the Federal Reserve unanimously voted to raise the federal funds target range by 25 bps to 3.75%-4.00%. The Committee emphasized persistent inflation pressures and reaffirmed its commitment to returning inflation to its 2% target. Policymakers also highlighted strong consumer spending and continued labor market resilience as evidence that economic activity remains on solid footing.<\/p>\n\n\n\n

Risks<\/h2>\n\n\n\n